SexTech Startups in a Hostile Business World: How is this environment fair? And who really pays in the end?

Written by MiKandi founder, Jennifer McEwen, for Modal View Culture.Originally published September 2014.

“When I introduce myself to folks outside the adult industry, the initial reaction is shock.

“You don’t look like the sort of person who does that,” they say in disbelief. They find it difficult to consolidate their vision of a pornographer with the woman standing before them.

Still they persist, hoping to find something to reinforce their presumptions about a woman in the adult industry.

“What do you parents think?” they ask in a tone of feigned concern. The truth is I’ve never asked my parents for their thoughts, because I don’t need to.

“But… it’s your company?” they wonder, because how can it be? Surely, women in the adult industry are in front of the camera, not behind it.

It’s usually around here where their presumptions are adequately shattered. The conversation moves forward, usually on the topic of sexuality and personal freedom. It will likely be open, honest, and positive. But occasionally, it takes a turn.

“You must be a sex freak!” some conclude, as if sexual appetite, not professional ambition, is the only logical reason why someone would choose this path.

And every so often, “Do you like to suck cock?”

Doubt. Disbelief. Dismissal. Disdain. Every step is a chance to challenge a misconception. Except for disdain. There’s nothing I can or will do to make them accept me at this point. It’s up to the other person to challenge themselves.

And so it goes for an individual in the adult industry, as it does for adult companies trying to operate in the mainstream business world.

Slut Shaming Adult Businesses

There are a few misconceptions about operating an adult business that many outside the industry believe. First, that no one pays for adult entertainment. Second, that the adult industry is a sure-fire way to make a lot of money. Third, that everyone in the industry is a scam artist. Not only are the first two beliefs contradictory, they all foster an unfriendly environment that thwarts real change in adult and tech.

By many accounts, my company should’ve been funded years ago. We’re a gender, race, religion, and culturally-diverse startup of engineers and designers, with a concept-proven first-to-market, industry-disrupting viable product accompanied by a strong portfolio of tech systems and developer tools, with millions of installs and thousands of contributors worldwide.

But we made a mistake. We built our product for adults.

As it turns out, a lot of people enjoy adult products, but few are willing to publicly back them. Aside from a handful of venture capitalists and angel investors who dared to venture into the adult space, most sextech startups find themselves left to their own devices. Hardly equipped with the tools necessary to navigate the anti-adult business climate they find themselves in, they begin to sink. Not because their business failed to resonate with customers, but rather due to the never-ending onslaught of restrictions placed on adult companies from mainstream companies. Often these restrictions are due to moral objections to the space we occupy.

There are tools and services many startups employ that either aren’t available to adult startups or that impose exorbitant fees on adult businesses, such as credit card transaction fees at an upwards of 13%, compared to mainstream’s 2.5-3%. Among these services are bank accounts, payment services, credit card processors, major app stores, newsletters, video encoding, in-app billing systems, crowd-funding campaigns, ad networks, public relations services, social networks, cloud storage, and even some SaaP. Take a quick look at your nearest Terms of Use and search for “sexual”, “pornography”, or “adult.” You’ll likely find yourself in the prohibited activity section.

Collectively, these restrictions are debilitating. The irony is that if they didn’t exist, my company, MiKandi, wouldn’t have the strong tech portfolio it has today. The majority of what we’ve built was done out of necessity. The rest was out of sheer engineering determination- the mindset of building before buying, and a dose of entrepreneurial stubbornness (“Oh, yes we fucking will!”). It’s that attitude that helps us weather this perpetual storm. When we encounter obstacles, we can build systems, features, and products around them. But since our accomplishments are either dismissed or acknowledged but not supported (if only we could pay our bills on props), we and other sextech startups need to work twice as hard to be taken seriously. Yet no matter how tech-first an adult company may be, eventually they’ll find themselves on precarious ground. There will be a time when the obstacles are too many and the resources too few. It’s then, when backed against a wall, the temptation to resort to spam and scam tactics is appealing. I’ve seen companies concede, “If we’re going to be punished for it, we had might as well do it.”

The belief that the adult industry is the fastest, surest way to make a lot of money is only true if one intends to use less than favorable tactics. One of the reasons why we’re in this predicament is because the industry is rife with shortsighted individuals and companies who are happy to cheat customers for a quick buck. These folks don’t tend to stick around long. Those who are trying to enact real change in the industry are left to suffer punishment from the mainstream business world. It’s an exhausting cycle.

MakeLoveNotPorn founder Cindy Gallop is all too familiar with this Ferris wheel from Hell. MLNP hopes to inspire social change through “real world sex.” Gallop is candid with the trouble she faces trying to fulfill her mission. After another disheartening rejection for a business bank account, she noted the hypocrisy next-generation adult companies endure in an anti-adult world.

“We are open, transparent, and ethical about Make Love Not Porn’s business and banks refuse us,” she tweets. “Fake name + hide what we do = bank account.”

Opening a business banking account is a simple quick task for most new companies. In MakeLoveNotPorn’s case, this has been a years-long battle.